The major purposes of this teaching unit are to increase the students' understanding of economic concepts and economic reasoning, and to explain how economic reasoning can be applied to an analysis of the causes and remedies of crime. The unit examines the economics of crime in dollars as well as the causes of crime and programs to reduce criminal activity. The unit centers on public policies that might be undertaken to control criminal activity. After a brief introduction in chapter 1, chapter 2 discusses the magnitude and distribution of crime, including the criminals, the victims, and compensation for the victims. Chapter 3 examines the economics of crime in relation to the profits to the criminal and the economics of crime prevention. The fourth chapter of the unit deals with the illegal drug problem. The unit concludes with a discussion of the problems of resource allocation at the various stages of the criminal justice system. (Author/JR)